Free Practice Questions for Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Exam

A Simplified Employee Pension (SEP) plan allows employers to make contributions directly into IRAs owned by employees. The employer determines contributions, and employees are immediately vested.

HR-10 plans are Keogh plans for self-employed individuals. 403(b) plans are salary reduction plans for certain nonprofit and public employees. SIMPLE plans allow both employer and employee contributions but are structured differently. Virginia retirement plan exam content clearly identifies SEP plans as employer-funded IRAs, making option C correct.

A straight life annuity pays income until death, with no further payments to beneficiaries. Exact extract: “Straight life annuities provide income for the life of the annuitant only; payments cease upon death with no refund.” This option offers the maximum periodic income but no residual value.

A SIMPLE IRA plan is designed for small employers and is known for ease of administration. One key characteristic is that employers generally do not have complex annual filing requirements, unlike many qualified retirement plans that require detailed reporting. Employees may choose whether or not to contribute through salary deferrals, so contributions are not mandatory. SIMPLE IRA plans have immediate vesting, meaning employees are 100% vested in both employer and employee contributions right away, not after years of service. Additionally, SIMPLE IRA plans are limited to employers with 100 or fewer employees, not 500. The simplicity and low administrative burden make these plans attractive to small businesses.

Medical expense claim forms generally focus on the occurrence, character, and extent of the loss to determine the eligibility and amount of benefits. The employee's annual salary is not typically included on the claim form unless the claim relates to a disability or income replacement policy, but not for medical expense claims.

A twenty-payment whole life insurance policy is a limited-pay whole life policy that requires premiums to be paid for only 20 years. If the insured survives the 20-year payment period, the policy becomes fully paid-up and remains in force for the insured’s lifetime without any further premium payments. If the insured dies before the 20-year payment period ends, premium payments stop at death, and the death benefit is paid to the beneficiary. Therefore, premium payments cease at the earlier of the insured’s death or the end of the 20-year payment period. The policy does not require premium payments until maturity or until cash value exceeds premiums. The correct definition focuses on the limited premium payment structure of the policy.

Automatic premium loans use policy cash value to keep coverage in force, and interest is charged on the borrowed amount. Exact extract: “The automatic premium loan uses policy values to pay overdue premiums; interest is charged on the loan balance.”

Straight whole life insurance provides permanent protection until death or policy maturity (typically age 100 or 120). It does not end at age 65.

Exact Extract (Virginia Life Insurance Study Guide): “Straight whole life insurance—permanent protection, level premiums payable for life, with guaranteed cash values, nonforfeiture options, and face amount payable at maturity.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Whole Life Insurance

Virginia Code § 38.2-3501 governs health insurance applications, requiring accuracy and applicant consent. Changes or corrections by an agent (e.g., fixing a misspelled name) must be initialed by the applicant (option B) to verify agreement, as the application becomes part of the contract (Virginia Code § 38.2-3503). Option A (agent) initialing alone risks unauthorized alterations. Option C (physician) is irrelevant; medical input isn’t standard for application edits. Option D (underwriter) assesses, not corrects, applications post-submission. The study guide likely stresses this consumer protection rule, with examples—e.g., an agent correcting a birthdate, initialed by the applicant—ensuring transparency, making B the correct party.

Virginia Code § 38.2-3502 mandates a “free look” period (typically 10 days) for individual health insurance, allowing the insured to review the policy and cancel it with a full premium refund (option D) if returned within that time. Option A (try without paying) is false; premiums are paid upfront, refundable only upon cancellation. Option B (compare policies) is a practical use but not the legal purpose; the provision ensures cancellation rights, not comparison. Option C (change coverage) isn’t allowed; modifications require underwriting, not free-look terms. The study guide likely details this consumer protection with examples—e.g., returning a policy on day 9 for a refund—making D the precise right.

In insurance contract law, per Virginia Code § 38.2-102, a contract requires consideration—something of value exchanged to make it legally binding. Option C (consideration) fits this definition: the insured’s premium payment and the insurer’s promise of coverage form the mutual value. Option A (grant) implies a unilateral transfer, not a contract element. Option B (codicil) is a will amendment, irrelevant to insurance contracts. Option D (covenant) is a promise within a contract, not the value exchanged. The study guide likely explains consideration as a foundational principle, using examples like a $500 premium for a $100,000 policy, distinguishing it from other legal terms. Virginia follows common law requiring consideration for enforceability, making C the precise answer.